Amortization and Depletion Entries
Data related to the acquisition of timber rights and intangible assets during the current year ended December 31 are as follows:
1. Determine the amount of the amortization, depletion, or impairment for the current year for each of the foregoing items. Do not round your intermediate calculation.
|Item||Impairment, Amortization or Depletion Expense|
2. Journalize the adjusting entries required to record the amortization, depletion, or impairment for each item.
Depletion, impairment & amortization refers to the amount of permanent loss in the value of the intangible asset. The reduction in value is calculated according to useful life of the asset. It reduces the value of intangible asset for the period of its use.
The amount of depletion, impairment & amortization is calculated as follows:
Purchase price of timber: $1,330,000
Estimated stand of timber: $7,000,000
Timber cut & sold: $1,900,000
Amount of depletion is calculated as follows:
The amount of impairment of goodwill: $1,280,000
Legal cost of patent: $10,830,000
Time period: 15 years
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